Will Tesla Hit 2 Million Cars in 2022?

2 Million in 2022 has a nice ring to it, but is it possible?

Tesla just released the Q3 production and sales numbers. Sales rose 35% compared to Q2. Giga Shanghai has moved past COVID restrictions and supply chain issues. Even with the significant sales increase, the numbers fell short of some Wall Street estimates. 

Year-to-date Tesla has manufactured 929,910 vehicles; nearly matching 2021's 930,422 (with 3 months still left to go). Tesla has given guidance of 50% annual growth. They will need a strong finish to the year to hit this forecast. 

A 50% increase over 2021's production is 1.4 million vehicles. To reach this mark, Tesla will need to manufacture 466 thousand vehicles in the remainder of the year. That would be 100 thousand more vehicles than they have ever produced in a single quarter; challenging, but not impossible.

As you can see in the chart above, Tesla's production has been growing exponentially. Q1 and Q2 of this year are outliers in that they are flat and down respectively. Q3'22 brings production back inline with the trend. However, Q1 & 2 will still be a drag on the annual production that will be difficult for Q4 to overcome. 

The titular question of this article is "Will Tesla produce 2 million vehicles in 2022?" To achieve this, they would need to produce 1 million cars in Q4. That's more than Q1, 2, and 3 of this year combined. I have no doubt that Tesla will (at some point) be producing one million vehicles per quarter, but that will not be this year. So the answer to the titular question is sadly 'no.' 

On the positive side, Giga Austin and Giga Berlin are both ramping production and should be able to contribute more than 60 thousand vehicles in Q4. Adding this to ~400 thousand that Fremont and Shanghai will produce and Tesla's goal of 1.4 million vehicles this year is within grasp, barring any force majeure events. 

Disclosure: I am long Tesla

Smart Thermostat vs Smart Battery

Our local electric utility has two programs with similar intentions to reduce grid load during times of high demand. We are participating in both and, sometimes, the two don't really work well together. 

Program 1: Energy Rush Hour

Our utility, Portland General, offers a program they call "Energy Rush Hour." This program attempts to alleviate the strain that air conditioning places on the grid during hot summer days. 

When people arrive home from work, they typically turn on the AC and with everyone turning on their AC around the same time, the grid load is very high during these hours (4 to 7 PM). Energy Rush Hour reduces this strain by pre-cooling participating homes. Pre-cooling typically starts at 3PM. This means that by 4PM when other homes are turning on their AC, the pre-cooled homes can shut off their AC. This spreads out the load. 

If the load wasn't spread out, then the utility might need to use peaker plants to supply the excessive short term energy need. Spreading out the load allows the existing generation infrastructure to fulfill the cooling power demand. Avoiding peaker use is good for the customers, the utility, and the environment. Peaker plants are among the most polluting energy sources and the most expensive source to operate. The cost to run these peakers is certainly passed on to customers in one form or another.

Any month that you participate in an Energy Rush Hour, you receive a $25 incentive bonus on your electricity bill. This more than makes up for an extra electricity use that you may have for having the AC kick on an hour or two early. 

So far, so good; let's look at the second program. 

Program 2: Home Battery w/ Time-of-Use

By default, residential PGE customers are on a flat rate fee structure. With a flat rate, it does not matter what time of day you use electricity; it's the same cost at 3PM as it is at 3AM. This is convenient since you can run your appliances at anytime of day or night and not get hit with higher fees. However, this default flat rate schedule is blind to the ebb and flow of grid demands.  

If you want people to understand something, put a price on it. This is what a Time-of-Use (TOU) rate schedule does. When there's typically surplus supply on the grid (such as overnight), you make the price cheaper to encourage use. And when demand is expected to be high (when hordes of people come home from work and turn on their AC), you make prices higher. PGE's TOU schedule has three rates: peak, mid-peak, and off-peak.

TOU nudges people to push loads into non-peak times. Much like the Energy Rush Hour program, this reduces the demand during peak hours and can avoid or reduce the need for peaker generation. 

We signed up for the TOU program because the off-peak rate is less than half of the flat rate fee. Our solar panels are able to offset most of our usage that's not off-peak and with the home batteries, we can time-shift our solar to make sure that we are effectively off grid during peak times. So we're reducing grid strain and saving on our electricity bill.

Where it Goes Wrong - The Interaction - 

Now you understand the two programs. On their own they work great, but mixing the two doesn't always provide the desired result. Since we're using our home battery to effectively go off-grid during peak hours (3PM till 8PM), tweaking our AC settings to reduce energy use from 4PM till 7PM has absolutely no impact on the grid. In fact the pre-cooling could result in over-all more energy use. This is fine when the power is coming from the grid. Using a little more during mid-peak to reduce the peak usage is certainly worth it. However, when our home battery is the energy source, optimal operation is more important than when it's used.

This is a subtle, second-order effect and I'm sure there are very few people in the PGE service region with batteries, on TOU, and enrolled in the Energy Rush Hour; so I'm not suggesting any immediate changes to either of the programs, but as more homes install battery systems, it will be something for the folks at PGE to consider. Perhaps the next generation Energy Rush Hour program will be aware of customers that have home batteries and have slightly different behaviors when homes that are battery-powered rather than grid-powered. If both the battery and the AC were managed under the same program, the coordination of the two could work much better. 

Ω

My Virtual Summer

Event Notification From Portland General Electric(PGE) Smart Battery Program

We joined our local utility's Virtual Power Plant (VPP). If you want to know more about what a VPP is, we've covered that here. In short, the utility can turn on (discharge) hundreds of home batteries like mine when needed to supply additional power to the grid. It's a dispatchable distributed (cloud) energy storage system. 

A VPP is like Energy from The Cloud

This is a list of all the times this year (so far), that PGE has tapped our battery to support the grid.

2022 PGE VPP Events To-Date
Date	Time	Rate	Energy
Jan 27	5PM-8PM	2kW	6kWh
Jan 28	5PM-8PM	2kW	6kWh
March 18	5PM-6PM	2kW	2kWh
April 13	8PM-9PM	2kW	2kWh
April 25	8PM-9PM	2kW	2kWh
July 11	5PM-8PM	3kW	9kWh
July 26	5PM-8PM	3kW	9kWh
July 28	5PM-8PM	3kW	9kWh
Aug 8	4PM-7PM	3kW	9kWh
Aug 17	4PM-7PM	3kW	9kWh
Aug 18	4PM-7PM	3kW	9kWh
Aug 30	4PM-7PM	3kW	9kWh
Sept 6	4PM-7PM	3kW	9kWh
Totals	33 Hours		90kWh

That's 13 events this year. The early events seemed to be testing out the system. These events were lower power and shorter events. The real use cases started in July. There were 8 of these hot summer day events, where our batteries worked in cooperation with all the other home batteries in VPP to provide energy and frequency stabilization.

I can't help but notice that the energy use total for this year is 90kWhs. Our Tesla Model X is a 90D, which means that the battery capacity is about 90kWhs. So these events used the same amount of energy as one fully charged Tesla Model S/X 90D.

Opt-out 

One final note, each of these event notifications comes with a simple opt-out link that you can click if you don't want your home battery to participate. I'm not sure why you'd opt-out if you're signed up for the program, but if you do have a reason to want your battery all to yourself, they make it easy to keep your stored energy for your own purposes.

6 Years of Tesla Model X Ownership

UPDATED (2022 Sept 21) Corrected unlimited mileage warranty. Hat tip to David Michel. 

Hard to believe it's been six years since taking deliver of a Model X. I still think of it as a 'new car.'

In September of 2016, I took ownership of the best (and most expensive) vehicle that I've ever owned. A Tesla Model X 90D. It's been a fun time even though there were a couple of bumps in the road. 

As early as 2014, I knew a plug-in SUV was going to be one of the vehicles in our home fleet. I assumed it was going to be a plug-in hybrid until I went for a ride along in a friends Model X test drive. This changed my mind. Hybrids (plug-in or not) were no longer on the table. 

I shudder to think about how much money I'd have right now if, in 2016, I had invested those funds into Tesla stock instead of buying a Tesla with it. To be clear, I did some Tesla investing too and it has done well, so I can't complain loudly. In fact, owning a Tesla vehicle made me understand the company, how far ahead they were, and then invest even more into the company stock. I call this self-reinforcing feedback loop The Tesla Cycle; but this is not a post about stock investing. Back to the six-year story.

Quick Stats 

Here are a few stats for my 6th year: 

My 2016 Model X
Miles Driven This Year	5,598
Lifetime Miles Driven	47,789
Lifetime kWh used	30,622
Lifetime Electricity Cost	$1,254
Lifetime Fuel Saving (see below)	$10,300
Wh per Mile	603
Miles per kWh	1.7
Cost Per Mile	2.6¢
Trips to Service Center This Year	2

 

'Fueling' Cost 

Primarily I charge in my garage, overnight, using an off-peak electricity rate of 4.1¢ per kWh. This is the value used in the table above, however, when we travel, we generally use Tesla Superchargers. I'm lucky to have free Supercharging for life (something Tesla no longer offers), so my actual total cost for charging is less than the $1254 amount shown above.

$1,254 is a lot of money, but this powered nearly 48 thousand miles of driving. How much would it have cost me to drive a similar sized and model-year gas vehicle? Let's compare my Model X results to a 2016 BMW X5 M AWD 4DR. The BMW X5 gets 14 city /19 hwy MPG. This means it would have burned about 2,900 gallons of gasoline over these 6 years. At $4 per gallon, fueling the BMW X5 would have cost more than $11,500. So a BWM X5 would have cost over 9 times more than 'fueling' a Tesla Model X. 

Year 6 Adventure Recap

Over the last year, most of our vacation travel has been by road rather than by air, so our Model X has been our primary vacation transportation. We enjoy traveling around the Pacific Northwest. In the last year, we've visited Seattle, Arch Cape and Hug Point Park, Mount Hood, Eugene, and Corvallis. Here are a few photos from this last year's journeys.

 

 

I'll leave it as an exercise for the reader to determine where each photo above was taken. 

Service Center Visits

Tesla's New Service Center in Tualatin, OR

First, Tesla has opened a new service center in the west Portland suburbs! This is great. When I first received my vehicle in 2016, the regional service center was in a rental space in Tualatin. Then they opened the South Waterfront Service Center in downtown Portland and closed the (convenient to me) rental location. The South Waterfront site was a much nicer, a larger building, but it is a pain to get to. It was farther away and there's always traffic in downtown Portland. 

This new service center solves that problem. The majority of Tesla vehicles in the region are on the west side suburbs in the Silicon Forest high-tech area and this location is perfectly positioned to service these vehicles. 

Both of my service center visits this year were related to the battery coolant system. I guess that's just something that starts having trouble at this age. 

Here are my two visits: 

1. In Feb, the coolant heater died (a bit of an oxymoron that coolant needs to occasionally be heated) - This was by far the biggest component failure that we've had during our ownership experience. The vehicle was out of action for 44 days, but they gave us a loaner. We were back on the road in early April.
   
   
2. In June of 2022, we went back into the service center for low coolant levels. Despite just having the coolant completely refilled just 2 months before, it was now reading low. The technician claimed the leak was completely unrelated to the work done in Feb/April. A quick three-way-value replacement and we were back on the road. Service was completed much more quickly this time; I dropped it off at 4PM on a Tuesday and picked it up at 3:30PM the next day. 

Software Updates

One of the coolest features of owning a Tesla is getting software updates. They bring improvements and fun extras. As an older model year, I don't expect (and don't have the required hardware) for all the bells and whistles. However, I'm surprised Tesla still updates vehicles as old as mine. They have long ago collected their payment for the vehicle. Yet, I received three updates this year. 

v10.2 2021.24.28

v11.0 2022.8.10.1 

v11.0 2022.8.10.5 

A few of the features that these updates added: 

• Stay connected to Wi-Fi while driving - a great feature if you are using your phone as a hotspot
• Improved Bioweapon Defense Mode - turn it on via the app and purify the air before you enter the vehicle
• Better driver profiles allows each driver to have their own home and work locations
• Customizable in-vehicle app launcher - put your favorite app (Spotify) in an easy to access spot in the toolbar 
• New app features to adjust charging current, scheduled charging from the Tesla app
• Better Autopark
• Dark Mode!
• Several cold weather improvements:

1. Improved cold weather preconditioning en route to Supercharger
2. Maintain front defrost climate settings when clearing ice and snow
3. Precondition cabin via the Tesla app even if the battery is low

Battery Degradation

I've been tracking the battery degradation since the vehicle was about 1 year old. After my poor experience with a 2011 Nissan LEAF, I was concerned about this with any EV I'd be purchasing next.

From Tesla: 

The Battery degradation coverage was clarified in a later version of the warranty:

Model S Model X

8 years or 150,000 miles, whichever comes first, with minimum 70% retention of Battery capacity over the warranty period.

Now entering year 7, the 8-year warranty terminal date is within sight. Other than the original Tesla Roadster and some really old Model S cars, not too many of Tesla's vehicles are outside of this coverage. With less than 50k miles on the odometer at this point, the 8-year mark is very likely to come before the "unlimited" mile mark (lol). But how close are we to the 70% battery pack retention level? Let's figure it out.

We began this year with 237 miles of range* and we are ending the year with 233 miles of range. We started with an EPA rating of 257 miles of range, and now in year 6 with 233 miles, that's 24 miles (or 9%) of lifetime degradation to-date. This is all easier to see in a graph. 

As you can see the degradation rate is slowing. In the first 3 years, it averaged a little over 2% per year and in the last 3 years, it averaged about 1% per year. We are still under 10% total degradation, so it seems unlikely that we'll have below 70% capacity in time for a warranty claim before the 8-year mark. A free battery pack replacement for me seems very unlikely.  

 

For completeness, here's the graph that I've shown in previous years, now with a view out the the end of warranty.

Another way to get an estimate of the vehicle range is to charge it to 100% full. I generally don't do this, but before one of our road trips this summer, I did just that. When fully charged, the display reported that we had 242 miles of range on July 22nd, 2022. This is a little more than the 237 mile estimate from the battery monitor, but in the same general area.

Solar

Our Model X parked in front of a solar array

For me, fueling our vehicle with energy generated on our own roof is an important and satisfying part of EV ownership. Technically, we usually charge overnight, with off-peak electricity rates, but this allows us to charge our home batteries and feed energy into the grid during mid-peak and peak times, reducing mid-day and peak grid load. As well as making our home batteries available for our local utility to dispatch when the grid needs it most. 

Over the last year our rooftop has generated 11,525 kWhs of energy. This would be enough drive our Model X nearly 20,000 miles. That's three and a half times more than we drove the X during this time.

Wrap Up

Another fun year of Tesla ownership. Our chariot took us on great adventures. Tesla has kept the ownership experience fresh with continued software updates bringing improvements and new features. This is likely one of the reasons our 6 year old vehicle still feels like new.  

We did have to replace parts for the battery coolant heater system, but these things happen. Tesla gave me a loaner vehicle, so I was not without a Tesla in the driveway, there waiting when a get-around was needed. 

Related Links

This is our 16th year driving electric. You can read more of that history here.

If you enjoy this post, you can see our other annual reviews and Model X milestone reports below:

Year 1
Year 2
Year 3
Year 4
Year 5

fin

Disclosure: I am long Tesla

Storm Watch Becomes Fire Watch

Tesla Powerwalls have an opt-in feature called Storm Watch. This is a reassuring feature; if there is a some danger in your area that could interrupt power service, your Powerwalls will charge up so you won't lose power if the grid goes down. If you have a medical device that you depend on and it must be powered, this can literally mean the difference between life and death, but it is also handy to keep the items in your freezer from melting or to keep your HVAC system operating.

Nowadays winter storms are not the only thing taking down the grid. In the summer, days are now hotter and that means more air conditioner usage. This can stress the grid. There are high winds. These can down lines or cause fire risk. That's what's happening as I write this. We received the below warning:  

High Wind Forecast & Potential PSPS Activity

Communities around the area may experience Public Safety Power Shutoffs (PSPS) this weekend due to high wind forecasts and elevated fire danger.

 

Portland General Electric (PGE) is considering safety shutoffs for pre-identified high hazard areas in their service territory. These include select areas in the Tualatin Hills, Coast Range Foothills, and Chehalem Mountain. If initiated, this would impact approximately up to 15,000 customers. Impacted residents have been notified by PGE and would continue to receive notifications both before, during, and after the potential shutoff.

Potential Public Safety Power Shutoffs areas in NW Oregon

This Storm Watch mode is now a year-round feature. Below is the notice that we received from the Tesla app. 

This event put the Powerwall on notice and it began charging up immediately. Usually, the Powerwall only charges from solar. This type of emergency event is the exception, it will charge from the grid and it will charge up regardless of the current solar production level or the current time-of-day electricity rate. The goal is just to get to full as fast as possible. 

Tesla App - Powerwall in Storm Watch Mode

In the image above, you can see our Powerwalls are 100% charged and the active Storm Watch indication. We generally let our Powerwall discharge down to a 20% reserve level in the evening to avoid peak rates as the sun sets. This could mean that, if we unexpectedly lost power, we'd only have 20% of our battery available to get us through the night until the sun comes up the next morning, allowing solar to power our home. Storm Watch is a nice set-it-and-forget-it method to ensure that we have 100% of our battery capacity available when we're most likely to lose power. In the winter, we bump that reserve amount up to 50% since solar production is not as assured.

Red Flag At Night 

For the US, Tesla uses Red Flag events from weather.gov as the trigger Storm Watch events. When we received the notice, I went to the national weather service website to see all of the impacted areas. Here's the map:  

From https://www.weather.gov/ 

As you can see, most of the west coast is under some level of warning and apparently all of Wyoming with most of Idaho, Nebraska, and South Dakota. 

Zoom in on NW Oregon

As we moved into the weekend, the red flags continued. The winds continued to create an ongoing fire danger. Here is a map of the active fires in Oregon: 

Active Wild Fires In And Around Oregon

With the ongoing fires and increasing winds, PGE did move ahead with the safety shut-off. So if you were in this area, unless you have a generator, home batteries, or an EV like the Ford F-150 Lightning with a Home Integration System, you were in the dark. 

fin 

Disclosure: I am long Tesla

X.com - How Elon Musk Could Reinvent The Internet

If you're familiar with the lore of Elon Musk, then you know he's one of the PayPal Mafia. Musk's x.com merged with Confinity in early 2000 to form PayPal. Musk has retained ownership of the x.com domain for the last 22 years since the creation of PayPal left it without a purpose. As of yet, Musk has done nothing with the URL which he has refused to release for so long.

PayPal was soon acquired by eBay for $1.5 billion. Musk has said that the innovation rate at PayPal plummeted after the acquisition. At that time PayPal was essentially a one-trick pony, you could pay someone by using their email address. It was a nice trick, but Musk and the other Mafia members had a grandiose vision far beyond this for PayPal's future. The plan was for it to be the one-stop-shop for all your financial needs; where you could do all of your traditional banking (savings, checking, credit cards, loans...), investing, and more. The “and more” is the exciting bit. We'll explore what this could mean soon, but first - Twitter. 

The House That Jack Built 

If you're reading this, you undoubtedly know that Musk attempted to buy Twitter earlier this year and it has become a chaotic tumult. The board of Twitter initially resisted Musk's takeover attempt, then changed their mind, just as Musk decided he no longer wanted to go forward with the proposed deal... The courtship has the makings of a rom-com plot. Now they are in court to see who will own Twitter and who will have to pay for breach of contract.

So why does Musk want Twitter? Is it just to continue his meme-lord trolling unabated? No (well at least not just for that purpose).

Musk tweeting about x.com as a potential platform

As the tweet above indicates, if the Twitter deal does not go through then Musk may launch x.com to fulfill his vision. In the 2022 Tesla shareholder meeting, Musk indicated that acquiring Twitter would accelerate his plan by 3 to 5 years. What is that plan?  

There's one more ingredient that I'd like to throw into the pot before we start mixing them to see what might come out. That final ingredient is Dogecoin.

The Doge Father

I don't think Musk's obsession with Doge is only because it's fun and memeable. Bitcoin is the grandfather cryptocurrency, but Doge might be a better fit for Musk's purposes. Doge is fundamentally different from Bitcoin in several ways: 

• Bitcoin was intended to be a new decentralized currency; Doge was started as a joke
• Bitcoin has a max supply of 21 million coins; Doge had no defined limit
• The price of Bitcoin has been as high as $65,000 USD; Doge has never been over $1

So what do these three big differences mean? Bitcoin is more like digital gold. It can be a store of value, but it is not very transactional. Doge, on the other hand, primarily because it low price, is much more utilitarian. It is much easier to understand the price of something if it is 5 Doge, rather than 0.0003 Bitcoin.

Further, Bitcoins scarcity grants a tendency for the price to increase over time. This makes it more likely that people will want to horde Bitcoin. Doge, on the other hand, has no built-in scarcity. As more Doge are issued, its price will tend to depreciate. This disincentives hoarding. If you have Doge, you'll be more likely to spend it.

MiXing It All Together

The three ingredients that we're mixing into this vision are a payment platform, a social platform, and a transactional digital currency.

What could X.com become:

   X.com for exchanging ideas
   X.com for exchanging funds

X.com - Mr. Musk, Tear Down This (Pay)wall!

The days of subscribing to just one or two paper newspapers for all of your news are long gone. Today, most of us get our news online from aggregators (e.g., Apple News, Google News, or Flipboard) and/or from social media. This means that there are many potential news sources for interesting articles that are shared. Some of these sources use paywalls to restrict their content exclusively to subscribers.

When the news stories that roll past our screens come from all over the world, subscribing to Hindi Times, Statesman Journal... and all of the regional sites for 2 years because they have one article that I happen to be interested in, is not a viable option.

I suspect this is a problem that many of us have encountered. The average digital subscription is $10 per month. It is unrealistic to think that anyone would have tens of subscriptions at that price. Rather, if there's a story I'm interested in, what I typically do (as I assume many of is do) is google the topic and find another (free) source covering the same story (often using the paywalled article as a source).

How could x.com fix this? Doge

All x.com accounts would come with a built-in Doge wallet. This could be funded by the user or the x.com paid tier (like Twitter Blue) would receive a monthly stipend of Doge. This wallet will be used to access paywalled content without a direct subscription. This would allow the publishers to be paid for their content and allow the public an ala carte option to only pay for the specific articles that they are interested in.

X.com - Pravda & Clickbait 

If you have people on the platform that have verifiably paid for access to an article, you could then allow them to rate the article. This would help weed out clickbait that don't deliver the content they tease in the headline. If Musk wanted to deep-dive in this area, articles could be rated on several metrics (accuracy, comedy, credibility, comprehensiveness...) fulfilling his 2018 Pravda vision. 

Will this yield the wisdom of the crowd or the ignorance of the masses? We may find out. We'll call this a bonus ingredient.

X.com - Peer Acknowledgement - Creator Support - Tip Jar 

Occasionally, online you see something that's insightful, inspiring, or just makes your day. When this happens, you might want to more than just click like, you might want to give the creator a tip. With everyone having a Doge wallet as part of their account, it would be easy for creators on the platform to have tip jar.

X.com - Live Events 

If you want to hold a live event similar to Twitter Spaces or Clubhouse, what if you charged a Doge or two to enter or to be promoted to speaker? Popular creators could hold large events and make it very easy for people to buy tickets to an online concert, speaking tour, or stand-up act. These could be immersive 360 events or simply audio. Attend live podcast recordings and pay a few Doge to ask a question... There are a lot of possibilities.  

In Conclusion

There's a lot of potential for a new media site that has a native internet currency. Musk could be the one to bring this into existence either as a next-gen Twitter or as the new x.com. The new site would have a crowdsourced mechanism to evaluate media content and sources. Until then, we have the courtroom drama to watch, to see how the legal battle unfolds, to find out if the single lonely letter x that resides on X.com will ever become something more. 

One Planet

We have one planet; we all share it; global warming is a global problem. To make the shift to renewable energy, hard choices must be made and political will is required in every city, county, state, country... If we don't make the hard choices now, Mother Nature will make them for us, without compassion, whether we're ready for them or not.

Batteries Make Everything Great About Solar Even Better

Solar is great. Solar plus batteries is even better. 

When you generate your own electricity with solar, you have a level of energy independence. You have some insulation from electricity price fluctuations from your utility. When you add batteries to the mix, things get even better. 

Batteries allow you to time-shift your solar use and they allow your solar system to continue to operate when the grid is out. That's right, most solar PV systems shut down when the grid is down. But if you have batteries, you can continue to produce your own power and keep the lights on. 

In addition to these benefits. Batteries buffer grid demand and fill in the solar production gaps that passing clouds can cause... To illustrate this, I'll show you the energy use of our home on a hot August day. You can see the energy perspective from our home and how solar plus batteries radically changes how this appears to the grid.

Home Energy Use on a Hot August Day

The above image shows our home electricity use. You can see that our electric cars start charging at midnight and both were fully charged by 3AM. The spikes that happen throughout the day are for the air conditioner. As you can see, as the AC cycles on and off, our electricity demand cycles up and down accordingly. 

Now let's look at the solar production for this day. 

Solar production on a hot, cloudy summer day

This particular day was bright and cloudy. The passing clouds caused spikes and dips in solar production.

Looking at the two images above, you can see that we have spikey production caused by clouds and spikey demand caused by an AC unit turning off and on. How did these two interact and what was the resulting grid demand? See below: 

Day's Grid Usage

You can see that at 6AM we stopped using the grid. In the afternoon, we exported some solar production. We didn't start using the grid again until late in the evening at 10PM. This is a big deal. During the day, electricity prices are at their highest and we aren't using the grid at all during this time. 

How can the grid use be negative during the day? How were all of these spikes in both production and supply resolved? Batteries. 

Battery Usage (~charging AM, discharging PM)

Batteries supplied energy before the sun came up; they were the buffer that supplied energy when the clouds passed. Batteries filled in the gaps when the AC kicked on and we needed more than the solar was currently providing. After the sun went down at 8PM, batteries exclusively powered our home until 10PM. 

Looking at the image above, you can see at 6AM the batteries started discharging (above the line). By 7:30AM the sun was producing more than our home needed and the batteries started charging (below the line). By 1PM the batteries were full. From here the batteries alternated between charging and discharging always making sure that the grid didn't need to be touched with anything other than surplus solar production. 

By 5PM the solar production was not enough to power our home. The batteries started discharging, working cooperatively with solar, and taking on more and more of the home load as the sun was setting and solar production was fading for the day.

At 10PM the price to use the grid is back to its cheapest rate, so the battery shuts off and our home went back on the grid.

For us, our 12 kW solar array is not enough for us to be 100% self-powered, but (with batteries) it is enough to ensure that we're off-grid when electricity prices are the highest. We're on a time-of-use fee schedule. From 10PM till 6AM is off-peak time. This is when rates are the cheapest. This is when the grid has surplus capacity. This is when wind energy production is generally at its highest. This is when the dams have to keep some minimal amount of water flowing downstream for water quality, even if the power is not needed. 

Shifting our grid demand to 100% off-peak means that the existing infrastructure is better utilized. And it means that we don't have to pay the higher prices for electricity at mid-peak or peak times.

So if you have solar or you are considering solar, I suggest adding batteries to the plan. 

fin 

Disclosure: I am long Tesla

Tesla's Biggest Advantage

In many ways, Tesla is unlike other car companies. It's not just that they aren't saddled with a legacy combustion business; there are EV start-ups like Lucid and Rivian that are similar in this respect. So what is it that makes Tesla different? 

We've previously written about some of these differences here (Tesla's moats) and here (Tesla is far more than a car company.) These moats certainly are important; however, this entry is not going to repeat those. Rather, this entry is about an additional advantage, one that isn't structural, and perhaps it's their biggest advantage.

A Matryoshka of Tesla Superchargers

Tesla was founded in 2003 (almost 20 years ago). Prototypes of their first car (Tesla Roadster) were officially revealed on July 19, 2006, during an invitation-only event at the Santa Monica Airport.

Just getting to this Roadster prototype phase in 2006, the company had already learned several lessons the hard way. The plan was: use a Lotus Elise body, an AC Propulsions motor, and commodity 18650 battery cells assembled into a battery pack that they'd design. The plan was simple, the execution not-so-much. 

Unknown Unknows

While creating Roadster, they ran into problems. Problems that they didn't even know existed until they tried to make something. The battery pack didn't fit into the existing Elise design. The motors controllers from ACP were hand-tuned analog devices; fine for a prototype, but not consistent nor scalable. Another unforeseen problem, there were no existing transmissions that could handle the torque that these powerful motors delivered. 

These problems were all eventually (mostly) solved and the Tesla Roadster came to the market in 2008. There was nothing like the Tesla Roadster out there. It was quick, sporty zero-emissions fun, but it was far from perfect. There were issues with hub flange bolts, 12V low-voltage auxiliary cables, and other things, but owners didn't care; they loved these cars. They were early adopters and they were willing to work through these issues. 

Tip of the Spear :: The Earliest Early Adopters 

This tolerance for quirks and imperfections is a part of being an early adopter. In fact, I'd argue that it's more than just tolerance. For early adopters, understanding these quirks and how to sidestep them to make a product do amazing things despite the quirks is part of the appeal. The earliest of the early adopters (sometimes called innovators) have a sense of wabi-sabi (侘寂), loving something because of its imperfections; not in spite of them. They are in a club that not just anyone can join, paving the way into a new future. 

Because there was nothing else like the Tesla Roadster, this little niche flocked to Tesla. Tesla's initial customers loved the products and the company and their imperfections.

The Benefit of Time and Iteration 

By building a product, the unknown problems became known. Known problems can be fixed. This is what Tesla did. The innovation-flywheel turned a little faster with each revolution. These were the first steps to scalable, affordable, vehicle production.  

When you are trying to solve a big problem (such as how to make a fast, affordable, long-range EV) you run into a lot of smaller problems along the way. The problems often have layers and you must keep "peeling the onion" to solve them. It's a recursive nest of problems until you finally solve a fundamental issue, solving this allows you to pop-the-stack; reversing back up the layers, unwinding the problems of each layer with solutions from the layer below.

Innovation Flywheel

The faster that you can move around this loop, the faster your products improve. Tesla does not restrain themselves to 'model years' because this slows down their innovation time. Instead, the vehicles have detailed computer models that let employees test things out in virtual space first. If the computer models show that this would be a better product (better range, performance, cost, build time...) then it is prototyped and tested. A small change could go from idea to rolling out the door in new cars later the same day. 

As changes are made, the software in the car is updated to recognize this change and self-test this new functionality as each car rolls off the line. Each car is its own unit test system. This helps ensure quality and it allows the cars to self-diagnose issues when service is scheduled. This built-in self-test provides a safety net for innovation. If a change introduces an unexpected second-order effect, one of the thousands of self-tests can catch it before the vehicle goes out the door. 

Now Versus Then

Tesla has had the advantage of time. They've had more than a decade of runaway to make mistakes. The 2012 Model S won Car of the Year when it came out. If a startup were to release a car like that today, it would be panned as slow, short-ranged, inadequately thermally managed..., compared to the Model S of today. 

Tesla's biggest advantage is that they didn't have to compete with anyone else that was a pure-play EV manufacturer for the first decade and a half of their existence. Or said another way: Tesla's biggest advantage is that during their stumbling, skinned knees, learning, ramp-up mode, they didn't have to compete with, well, Tesla. 

           

Tesla's biggest advantage is that they didn't have to compete with Tesla. 

New Start-Ups Have A Bigger Challenge

Today's start-ups don't have a decade-plus of runway to try things, make mistakes, and learn lessons the hard way with sympathetic, enthusiastic early adopter customers. New EV companies have to launch a product that already has a decade of learnings in its initial release. It has to compete with EVs from the legacy automakers as well as Tesla. It is not impossible, it's just much harder. For example, Rivian's truck (RT1) is coming out and going head-to-head with the Ford F150 Lightning in many ways. Looking at the electric truck market, some buyers will be more comfortable buying one from Ford since they know where they can get it serviced and they know* Ford will still be in business five years from now. The road to profit and scale is not impossible for Rivian, but it will be a bumpy ride.

Tesla's Model S was introduced to a very different world than Rivian's truck. When the Tesla Model S came out, it was in a category of one. Model S didn't have to compete head-to-head with the likes of an electric Audi A7.

           

When the Tesla Model S came out, it was in a category of one. 

2012 Model S compared to 2022 Model S

What is the result of this innovation-flywheel running for a decade? As stated above, if a vehicle similar to the 2012 Model S were released today, it would not receive a warm welcome. To illustrate this point, let's compare the 2012 Model S to the 2022 Model S. 

2012 Tesla Model S

2022 Tesla Model S

Model S	2012 85 RWD	2022 Long Range Dual Motor
Price (Long Range)	$115,050	$99,990*
Price (inflation adj.)	$144,069	$99,990
Range (miles)	265	375
0-60	4.3 sec	3.1 sec
Autopilot/FSD	None - no cameras (AP was intro-ed in 2014)	AP standard, FSD Upgrade $12,000
Supercharging Rate (kW)	90 (5 miles/minute max)	250 (11 miles/minute max)
Gaming	Chess, Backgammon, a few 80s arcade games	Equivalent to modern game console, Steam client support planned

* price as of 5/1/2022

As you can see in the table above, the Model S has improved significantly over the 10 years of its life. The current cost (esp. inflation-adjusted) is significantly less, yet you get a quicker car, faster charging, more range, better ADAS, and better infotainment technology. 

If Tesla (or anyone else) released a car today with the 2012 S price and specs, they would not win Car of the Year or enjoy the warm reception that Tesla had in 2012. This is the first-mover advantage and Tesla was given nearly 20 years to figure it out. 

Tesla's biggest advantage is that they didn't have to compete with Tesla.

fin 

Disclosure: I am long Tesla